Despite the significant growth of many African countries, the sum of the GDP of the African continent is equal to that of France. These are among others the words of Barack Obama at a United States – Africa forum held in New York. Yes you read that correctly, this is the comparison of a whole continent (continent made up of 55 countries) to a country. Yes. Only one. The link between the African continent and France is certainly “unbreakable” but… Was he right or wrong? Let’s go look!
55 States, most of which have a low GDP …
Let’s go step by step, what exactly do we mean by GDP? GDP or even Gross Domestic Product is an economic indicator allowing the measurement of the wealth produced in a country or a geographic area during a given period. The international standard for calculating GDP of the United Nations (UN) is called the “System of National Accounts” for short SNA. The one in force is the 2008 SNA. When we take a look at the ranking of African countries according to their GDP over the years we can quickly see that a plethora of them have extremely low GDP. . By adding the GDPs of African countries in 2013, we obtain 2,513 billion US dollars: we see that Africa’s GDP corresponds to that of France or Brazil. We can say that Barack Obama was not wrong.
GDP is not always reliable …
First of all, it should be noted that there are several versions of the SNA and the one in force is that of 2008. Two, the national statistical services are not always trained or do not always have the adequate resources for the collection. and analyzes of economic data. Not to mention that not all parts of the African economy are taken into account. So if we look closely, only seven African countries provide reliable economic data (in line with the 2008 SNA). Not to mention that eleven of them use the second version of 1968. The math is quickly done, many data can only be biased. In addition, it should be remembered that most African countries do not always update their data. Morten Jerven, an economist at the University of Life Sciences in Norway and Simon Fraser University in Canada says that the low GDPs of most African countries contain large margins of error.
ASF as an indicator …
GDP can be misleading in that according to Mizuki Yamanaka (statistician at the World Bank), when comparing the production of several countries, market rates do not reflect the cost of living. Purchasing Power Parity (PPP) is thus used to avoid any confusion. One of the weaknesses of the use of ASF is found in the absence of several goods and services from the countries of the North in the countries of the South (according to Angus Deaton and Alan Heston, respectively Nobel Prize in economics and researcher of the University of Pennsylvania). As the ASF has no alternative, the International Comparison Program made a comparison in 2014 between Africa (with data from 52 countries) and France. Comparison based on GDP data adjusted for differences in purchasing power:
- Africa: US $ 5.35 trillion (1 trillion = 1,000 billion)
- France: 2.66 trillion US dollars
With this analysis, Barack Obama’s claim could be revised.
Each situation has its own indicator …
Yes we are not done yet. Patience. Each context has its indicator. Morten Jerven reminds us that comparing two countries to get an idea of the overall economic situation of a region should not take into account the PPP adjusted GDP but the monetary value of the period. Kenyan economist David Ndii (director of the business intelligence firm Africa Economics), meanwhile, makes it clear that there is no single indicator that can be applied to every situation.
All in all, the basis for Barack Obama’s assertion depends entirely on the context. In addition, there are two ways to compare the GDPs of several countries. The first method is to convert the period market value of GDP into US dollars: this is GDP at market prices. And the second is to adjust the GDP by taking into account the differences in purchasing power: this is the GDP based on PPP. So, in the case of using the first method, Barack Obama is correct. Knowing that taking into account the prices of the period leads to erroneous results due to the large gap between purchasing powers. In this perspective Barack Obama is wrong. However, many analysts favor the first method. However, we cannot deny the weakness of the figures concerning the GDP of African countries. Would such an assertion come as a wake-up call aimed at making African countries understand, as a whole, that they must “reconsider” their relationship with France? But again, is this a message that encourages awareness about the real potential of the continent, which for the time being is far from being fully exploited?
Leave a Reply